Correlation Between FT Cboe and USCF Midstream

Can any of the company-specific risk be diversified away by investing in both FT Cboe and USCF Midstream at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining FT Cboe and USCF Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FT Cboe Vest and USCF Midstream Energy, you can compare the effects of market volatilities on FT Cboe and USCF Midstream and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FT Cboe with a short position of USCF Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and USCF Midstream.

Diversification Opportunities for FT Cboe and USCF Midstream

0.11

Correlation Coefficient

FT Cboe  USCF Midstream

Average diversification

The 3 months correlation between BUFD and USCF is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and USCF Midstream Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCF Midstream Energy and FT Cboe is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FT Cboe Vest are associated (or correlated) with USCF Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCF Midstream Energy has no effect on the direction of FT Cboe i.e., FT Cboe and USCF Midstream go up and down completely randomly.

Pair Corralation between FT Cboe and USCF Midstream

Given the investment horizon of 90 days FT Cboe Vest is expected to generate 0.45 times more return on investment than USCF Midstream. However, FT Cboe Vest is 2.23 times less risky than USCF Midstream. It trades about 0.22 of its potential returns per unit of risk. USCF Midstream Energy is currently generating about 0.0 per unit of risk. If you would invest  2,584  in FT Cboe Vest on May 20, 2025 and sell it today you would earn a total of  133.00  from holding FT Cboe Vest or generate 5.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FT Cboe Vest  vs.  USCF Midstream Energy

FT Cboe Vest

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, FT Cboe is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

USCF Midstream Energy

Risk-Adjusted Performance

Weakest

Over the last 90 days USCF Midstream Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, USCF Midstream is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with FT Cboe and USCF Midstream

The main advantage of trading using opposite FT Cboe and USCF Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Cboe position performs unexpectedly, USCF Midstream can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in USCF Midstream will offset losses from the drop in USCF Midstream's long position.

The idea behind FT Cboe Vest and USCF Midstream Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..